GeBBS Healthcare Blog

According to a recent survey conducted by a major healthcare consulting firm, a growing number of U.S. doctors are leaving private practice for hospital employment. Only one-in-three will remain independent by the end of 2016, according to the survey. The number of independent physicians has declined over the last several years, from 57 percent in 2000 to 49 percent in 2005.

What are reasons for this dramatic decline in independent physicians?

The reasons cited most frequently are reimbursement pressures and overhead costs. Governmental regulations and various reimbursement mandates are making it almost impossible for independent physicians to survive. Many doctors are opting out of public programs, such as Medicaid, health exchange plans and Medicare.

Ascension Health, the nation's largest Catholic and nonprofit health system and a subsidiary of Ascension, showed everyone it recognizes the value of professional outsourced revenue cycle management when it made an offer last week to buy Accretive Health, the beleaguered RCM firm. Ascension is Accretive’s largest customer, representing about half of the company’s gross revenue from contracting activities last year. The health system said it does not intend to renew its professional service agreement with Accretive when it expires on Aug. 6, 2017, but they are apparently very interested in maintaining the company’s RCM services, hence their offer to buy Accretive.

Ascension isn't the only health system interested in owning an RCM firm, a strategy which has benefited for-profit hospital chains in recent years. Catholic Health Initiatives recently raised its stake in Conifer Health Solutions, an RCM firm majority owned by Tenet Healthcare Corp., to 23.8% from 2%.

The fact that these two large health systems are interested in owning RCM companies exemplifies the enormous benefits of having a professional outsource revenue cycle partner on any size hospital’s financial team. 

Earlier this month we saw the announcement of the Aetna/Humana acquisition and now, within the same month, Barnabas Health and Robert Wood Johnson Health System in New Jersey are following suit. The guiding force between this newly announced merger is most likely the opportunity for these two organizations to expand their reach, manage population health and adapt to new payment models.

With other large mergers looming in the distance, in New Jersey and throughout the U.S., I pose the question, once more, “what does this merger mania mean for the healthcare industry and what will be the fallout?”

Healthcare consumerism is going to be an important factor in the new healthcare financial environment where a number of patients are going to be responsible for a portion of their healthcare costs. Empowering healthcare consumers to schedule appointments, receive online statements, and make electronic payments are just a few of the options that consumers are demanding.

How can today’s healthcare providers meet this increased demand for consumerism in their healthcare delivery? One solution is to employ a professional, outsourced, state-of-the-art call center that can exclusively handle your patient inquiries.  This center can offer the up-to-date infrastructure you need to handle heavy call traffic and manage call volume peaks and valleys with ease. Experienced healthcare billing professionals can provide quick resolutions to patient issues and queries. 

The Aetna/Humana acquisition brings together Humana’s growing Medicare Advantage business with Aetna’s diversified portfolio and commercial capabilities - creating a company that serves the most seniors in the Medicare Advantage program and the second-largest managed care company in the United States.

What is fueling this merger mania? It is rumored that other big mergers are in the works and could be announced soon.

One reason for this merger activity could be that profits in the health insurance industry are effectively capped due to the Affordable Care Act’s medical cost ratios, so national insurers think they need to get bigger or risk losing out. These large, diversified insurers are looking to expand their core health plan businesses and take new services to market.

In today’s healthcare environment of shrinking reimbursements, due to governmental mandates and Medicare policy changes, the importance of maintaining a healthy revenue cycle is second only to providing the best patient care possible. Without an adequate margin there can be no medical mission.